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Expanding California's TV, Film Tax Credits 'Reasonable,' State Analyst's Office Says

6/17/2014

By Todd Cunningham
TheWrap

California's Legislative Analyst's Office on Wednesday issued its preliminary observations on the pending TV and film tax credit legislation, and it was a mixed bag for backers of the bill.

The report, Film and Television Production: Overview of Motion Picture Industry and State Tax Credits from the Legislature's non-partisan fiscal and policy advisory agency, doesn't make a recommendation on legislation to extend and expand the state's tax credit program. Rather, it's intended to provide background for lawmakers who are considering Assembly Bill 1839, California's Film and Television Job Creation Program.

While noting that it might be difficult for the California not to provide subsidies and still maintain its leadership position in the industry — and pointing out that there were good reasons to consider protecting the state's flagship industry — the report said that if legislators do renew and grow the existing program, it should do so cautiously.

Also read:  Gov. Brown Getting the Message on California's Film, TV Tax Credit Troubles

Assemblymembers Mike Gatto (D-Los Angeles) and Raul Bocanegra (D-Pacoima), who authored the bill, focused on the report's positive aspects.

"The report confirmed what independent economic analyses of California's Film Tax program have found: that the program has merit," they said in a statement. "Today's report states that it's 'reasonable' to continue and expand the program and that the program pays for itself in state and local taxes, even without considering the revenue generated by tourism and other related industries.

"The report also confirmed that this flagship industry is at risk and that competition from other states and countries is both an aggressive and credible threat to California's economy. We appreciate the LAO's independent analysis and for recognizing that the uncertainty of our ability to sustain this industry in California makes it 'reasonable' to continue expansion of the current program."

Also read:  LA Film Shoots Surge 24 Percent Thanks to Tax Credit-Qualified Films

The report cited six factors that lawmakers should factor in as they consider the bill:

Film and television production in California could decline anyway.

Responding to other jurisdictions' subsidies could be very expensive.

Interstate and international competition could stoke a "race to the bottom."

For state government, the film tax credit does not "pay for itself."

Subsidizing one industry sets an awkward precedent.

It will be difficult to evaluate the effectiveness of the film tax credit.

More to come …

The post Expanding California's TV, Film Tax Credits 'Reasonable,' State Analyst's Office Says appeared first on TheWrap.

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